graph editor problem

Kind of a bozo question, im sure.....but i can't figure this out.
I'm using the graph editor to adjust speed and easing of position data...
I have no idea how to freely drag the shoulders of the anchor point ( i believe this is the right terminology).

I can drag the shoulders, but only horizontally....i cannot drag the shoulder vertically.
This prevents me from creating smooth curves in my graph.

Just to be clear, when i say shoulders i'm talking about the two additional points on each side of a keyframe (in the graph editor) which allow you to manipulate the curve.

I'm assuming it can be adjusted the same way you would use the pen tool in Illustrator, but i can't achieve this...